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St. Charles Health System announces additional cost savings measures

Oct. 17, 2017

BEND, Ore. - Facing flat to declining revenue, inflation on labor and medical supply expenses and reimbursement impacts due to decisions made by the state legislature, St. Charles Health System is working to close a $25-$35 million gap in operating income for 2018.

Closing that gap is necessary to allow St. Charles to strive for a 3.7 percent operating margin in 2018, ensuring the organization can provide safety net services to the community and reinvest in its facilities and people.

“Although we have made progress in many areas, we know that legislative changes and our shifting payer mix will continue to be problematic as we look at 2018,” said President and CEO Joe Sluka. “We have to adapt to a new reality while still fulfilling our mission to serve all patients—and meeting our obligation to lower their overall cost of care.”

As a result, the health system has made the difficult decision to lay off up to 30 caregivers this week.

Additionally, the organization will be:

  • Reducing non-contracted, salaried caregivers’ pay by 5 percent for a minimum of six months starting Jan. 28, 2018.
  • Suspending Merit increases for caregivers in 2018. Up to a 3 percent cost of living increase will be given to caregivers making less than $30 an hour next spring. This does not affect Oregon Nursing Association (ONA) step and grade increases.
  • Increasing non-ONA caregivers’ cost to participate in the company’s health care plan;
  • Cutting its executive team’s pay by 10 percent for a period of at least nine months.

St. Charles also recently completed its voluntary separation option and 72 caregivers who applied were offered the opportunity. They have until Nov. 21 to accept their buy-out packages.

In addition, St. Charles leaders have reached out to the ONA requesting a meeting to discuss how the union will be willing to help during these challenging times.

“These are incredibly difficult decisions,” Sluka said. “But taking these steps will save an additional 80 positions and will allow us to stabilize our finances without significantly impacting the services we provide to our community. We asked our caregivers for their ideas on how we could cut costs and many said they would be willing to take a reduction in pay to support the organization. We are grateful for their support.”

About St. Charles Health System

St. Charles Health System, Inc., headquartered in Bend, Ore., owns and operates St. Charles Bend, Madras, Prineville and Redmond. It also owns family care clinics in Bend, Madras, Prineville, Redmond and Sisters. St. Charles is a private, not-for-profit Oregon corporation and is the largest employer in Central Oregon with more than 4,200 caregivers. In addition, there are more than 350 active medical staff members and nearly 200 visiting medical staff members who partner with the health system to provide a wide range of care and service to our communities.